Even at a time as critical as this, members of Congress – and even some of the American people – are pushing back against Treasury Secretary Henry Paulson’s $700 billion bailout plan. They’re more concerned with punishing Wall Street bankers than making sure the ATM spits out money the next time they need it. And if the plan doesn’t pass, there’s a very real possibility that ATM could end up empty.
“This plan is about averting an economic disaster that could make it so you need to work two, maybe three, jobs just so you don’t get foreclosed on,” Cramer said. “It’s not about the need to keep Libor down.”
But no one seems to know this because Paulson’s done such a terrible job of selling the bailout, Cramer said. In fact, maybe the problem is the phrase “bailout.” If Cramer were consulted before Paulson announced his plan, the Mad Money host would have suggested a better name: “Invest in America.” That way the focus is on real people and not failed financiers. Instead Paulson talks of “commercial paper” and not the need to guarantee car-buying Americans the necessary loan.
“The world revolves around credit and confidence,” Cramer said, and before the plan’s announcement last week there was neither. It was so bad that Cramer thinks the Dow could have easily dropped 2,000 points on the potential failure of so many companies – pretty much everything beyond the food and drug stocks. Why? Foreclosures. The banks had so much money tied up in bad mortgages they didn’t have enough capital to lend. So, Cramer said, if you want people to be able to borrow money, you should support Paulson’s plan.
Things are bad if Warren Buffett has to swoop in and save a company as good as Goldman Sachs. Because as strong as that investment bank was, it was on the precipice. Imagine then how lesser banks fared last week.
The administration will have to make some compromises, possibly a stimulus package, help on foreclosures, an executive compensation review board. But “make no mistake,” Cramer said, “this is about investing in America’s economic stability, not rescuing a bunch of undeserving bankers who took on too much risk and deserve to be punished.”
Jim's charitable trust owns Goldman Sachs.
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